Indian IT firms hire few U.S. workers

Indian business group blames 'skills shortage' for low hiring rate

WASHINGTON -- Indian IT services providers hire relatively few U.S. workers -- about one out of every 10 of their U.S.-based employees is a U.S. citizen, according to a study by an Indian industry group that was released at a forum at the U.S. Capitol.

The Confederation of Indian Industry (CII) surveyed Indian companies across a variety of industries and found that in the majority of sectors, about 80% of their U.S. workforces were local hires. The exceptions were in the IT and business-process outsourcing (BPO) industries, where Indian companies relied mostly on visa-holding workers.

The IT and BPO industries "seem to exhibit less dependence on the U.S. workforce," the CII report said. "This may be explained by a skills shortage in the U.S., [and by] the availability of a highly qualified Indian workforce that dominates the IT and BPO sector not only [in] the U.S. but also globally."

The CII study illustrates the contributions that Indian businesses make to the U.S. economy. But the fact that only 10% of the U.S.-based employees of Indian IT companies are U.S. citizens puts a bright line around the need of Indian companies for access to the H-1B and L-1 visas. It also exposes their potential vulnerability to congressional action.

Indian companies are particularly worried about longstanding legislative efforts by Sens. Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa) to limit the percentage of H-1B visa holders in their U.S. workforces to 50%.

Among those at the forum was Meera Shankar, who is India's ambassador to the United States, and several lawmakers, including Rep. Jean Schmidt (R-Ohio).

Schmidt praised Tata Consultancy Services, which employs about 450 people at its North American Delivery Center in Milford, Ohio. "We found a partner with Tata," she said.

Former Ohio Gov. Ted Strickland, a Democrat who lost a re-election bid in November, favored granting tax breaks to Tata for building its delivery center in Ohio. But last August, when he was involved in a close race with Republican challenger John Kasich, Strickland issued an executive order prohibiting state agencies from awarding contracts to any companies that send work offshore. He said offshoring posed "unacceptable" security risks. Strickland lost to Kasich, and the executive order ended when he left office.

In an interview following the forum, Schmidt was asked how she reconciled the differences between those who don't have a problem with offshore outsourcing and those who are fearful of it. "We're global, and so we have to look -- is it going to be a plus for my community, for my state and for my country? And if that's the case, I think we need to move forward and try to make it work," Schmidt said.

Rep. Joe Crowley (D-N.Y.), co-chairman of the congressional Caucus on India and Indian-Americans, was asked in an interview about his outlook on the effort by some lawmakers to increase the H-1B cap. He plans to support a cap increase but was doubtful it would happen as part of comprehensive immigration reform.

Nonetheless, Crowley said, "I think we can make some adjustments" to the visa program, which he said is needed to help retain people from other countries who earn advanced degrees from U.S. universities.

Encouraging foreign graduates, particularly those who hold advanced science, technology, engineering and math-related degrees, to remain in the U.S., has been cited by President Obama as a policy concern. But it is also a different issue from the one underlying last week's forum.

For India, free trade means free movement of services workers in an out of the U.S. And Indian businesses are trying to convince lawmakers to see this relationship as mutually beneficial, with both countries gaining from the benefits of trade. The CII says 35 Indian companies in all industries have created some 60,000 jobs in the U.S.

But trade relations, at least as far as India's IT industry is concerned, are on an unsteady course. Congress recently increased fees for H-1B visas by $2,000, and Indian IT companies are facing increasing visa processing requirements, said Som Mittal, president of India's leading IT industry group, the National Association of Software and Services Companies (NASSCOM).

Indian companies are being hurt by "excessive denials" of visas and burdensome requests for evidence in support of visa petitions, issues that immigration lawyers in the U.S. have also complained about, Mittal said.

"At a time when we are opening up borders for trade, the free movement of people does become a big irritant," Mittal said. The problems with the visa are coming at the same time that U.S.-India trade is increasing, he said. "These issues are becoming very sore points in discussions."

Proponents of offshore outsourcing argue that the ability of U.S. companies to shift work to lower-wage countries allows those companies to reinvest the savings and create other jobs. Opponents say offshore outsourcing leads to job losses and a discouraging future for IT, particularly as more complex work moves offshore.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com.

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